In pulsed laser deposited silicon nanoparticles (Si-nps) embedded in silicon nitride, we have observed that crystalline planes of higher Miller indices grow with increasing time of deposition having noticeable shape and size dispersion. Chemical composition of the silicon nitride film was found to have silicon (Si) in all the valence states from 1+ to 4+ and the elemental Si having valence state 0 was found to be present only in the samples which host Si-nps. The transmission spectra showed a red shift with increasing time of deposition plausibly due to enhanced morphological inhomogeneity in the Si-nps. Stokes Raman spectra of the as-grown Si-nps deposited for different growth times showed LA, LO, TA and TO phonon mediated transitions of amorphous and nanocrystalline Si. Significant improvement in the crystalline quality of the nanoparticles was confirmed by the Raman spectra of the annealed samples. The photoluminescence (PL) spectra of as-grown Si-nps showed multiple transitions due to a combined effect of the morphological inhomogeneity and quantum confinement of charge carriers in the nanoparticles. Annealing of the samples reduced the line width and number of transitions of the PL spectra of the Si-nps for all the deposition times. Amongst the annealed samples the line width of the PL spectra of the Si-nps increased with the deposition time. The silicon nitride thin films also showed a distinct PL spectrum due to defect states, which was found to diminish on annealing. These studies provide further insight into the basic optical processes in Si-nps.